The Whale Alert Twitter account caught a $5B Tether print run. Tether and Bitfinex CTO Paolo Ardoino confirmed that this was a mistake and that the surplus USDT had been destroyed. Nevertheless, Bitcoin price started to depreciate.
It could be either fat fingered or Mexican soap watching person that made stablecoin operator Tether accidentally mint and subsequently burn 5 billion USDT tokens.
As twitter crypto Whale Alert tweeted, 50 million USDT tokens were transferred from cryptocurrency exchange Poloniex to the Tether Treasury via the Omni protocol on the Bitcoin (BTC) blockchain. The account subsequently reported that Tether Treasury minted 5 billion USDT tokens on the Tron blockchain, after which it burned them.
💵 💵 💵 💵 💵 💵 💵 💵 💵 💵 5,000,000,000 #USDT (4,996,932,524 USD) minted at Tether Treasury
— Whale Alert (@whale_alert) July 13, 2019
After that, Tether minted another 50 million USDT on the same chain, burned another 4.5 billion USDT, and finally transferred 50 million Tron-based USDT tokens to a wallet presumably belonging to Poloniex.
Official news is that the amount printed should be have been 50M as part of a swap from Omni to Tether. This was corrected by burning the full amount in two subsequent transactions.
Tether CTO Paolo Ardoino tweeted:
While preparing the issuance for Omni to Tron swap there have been an issue with the token decimals. Please check the burn transactions below @Tether_tohttps://t.co/reEW51qCqihttps://t.co/zo5i3ayTuQ https://t.co/h1Y9Mnr4Oq
— Paolo Ardoino 🍐 (@paoloardoino) July 13, 2019
From cryptocurrency exchange Poloniex they confirmed what happened saying:
“Paolo is correct – this occurred while Poloniex was conducting a USDT chain swap with the help of Tether. An incorrect amount of USDT was accidentally minted, and this has since been resolved to the intended value.”
Nevertheless, Tether is no longer suspected of engaging in price manipulation. Let’s just remind you that the company has a pretty “interesting” past in this regard. Last week, the New York Attorney General’s Office has filed a Memorandum of Law against cryptocurrency exchanges Bitfinex and Tether. The filing claims Bitfinex and Tether have run an unregistered security offering, issued tethers as loans and illegally conducted business in New York, even though they are banned from operating there.
If the accusations are true, this means the exchanges offered unbacked Tethers as loans, despite claims that these “stablecoins” were backed by real money in offshore bank accounts. Bitfinex has now claimed that the Tethers are 74% backed.
Also, let’s not forget that allegedly, minting of fresh USDT, especially in such large amounts, is considered by the community as a sign that the price of Bitcoin will soon take off in a certain direction. Even Bitcoin’s recent rise appears to coincide with the creation of new Tether tokens. The market cap for the token has similarly grown in recent weeks. Some crypto analysts suspect Tether (the company) is creating USDT not fully backed by dollars and using it to buy Bitcoin, driving up its price, through Bitfinex.
Almost immediately after the transaction was first caught, Bitcoin declined by about 3.5%, falling below $11,000. The price went on to increase but has since declined further, and is currently trading at around $10,700 which marks a drop of about 4.5%. At the time of writing Bitcoin was at $10,348 with the fall of 7.56% and Tether was holding itself at $1 with no fall whatsoever.
Be it as it may, for now, there is no actual, solid measure to prevent Tether from printing billions, except for the fact that people would notice it happening. We hope this wasn’t a deliberate attempt to, again, “destroy Bitcoin”.
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